Monday, August 20, 2012

Late on Sunday, Judge Lucy Koh, the federal judge presiding over the Apple v. Samsung trial in San Jose, surprisingly overruled Magistrate Judge Paul S. Grewal and entered an order that is a major breakthrough for Samsung. This reversal significantly increases the Korean company's chances of getting a verdict it can live with.

Instead of providing an adverse inference instruction only against Samsung, the court will tell the jury the same thing about both companies.

Here's what the court intends to say about Samsung (theoretically, this could still change after the parties' high-priority objections and a Monday hearing):

"Samsung Electronics Company has failed to preserve evidence for Apple's use in this litigation after Samsung Electronics Company's duty to preserve arose. Whether this fact is important to you in reaching a verdict in this case is for you to decide."

And the same thing about Apple:

"Apple has failed to preserve evidence for Samsung's use in this litigation after Apple's duty to preserve arose. Whether this fact is important to you in reaching a verdict in this case is for you to decide."

As a result, the jury will not consider Samsung less trustworthy than Apple, which would have been the case if Judge Grewal's decisions to give such an instruction only against Samsung but not against Apple had been upheld.

Samsung's legal argument was that Apple's duty to preserve email must have arisen no later than Samsung's duty. Samsung wanted equal treatment: either an adverse inference instruction against both parties, or none at all. Magistrate Judge Grewal did not even reach the question of equal treatment because he denied Samsung's motion as untimely.

Judge Koh also decided on a much softer instruction than the one Magistrate Judge Grewal had proposed.

It appears that Judge Koh was too concerned about appearing to apply double standards to the two parties. However, I continue to believe that the facts in Samsung's case -- given that the Korean company already faced problems in U.S. litigation due to its automatic deletion of emails seven years ago -- were far more serious than the ones in Apple's case. Judge Koh certainly missed an opportunity to show strength and treat companies differently if the facts warrant it, even if the parties' conduct may appear comparable at the highest level of abstraction.

If the outcome of the trial is unfavorable to Apple, Apple may very well prevail on this question on appeal and get a retrial with a different instruction. But for the jury deliberations that will start on Wednesday, Apple's only chance is to make Judge Koh change mind at the Monday hearing, and that is going to be very difficult.

Apple is still in a very good position to win this case. But it would have been even easier for Apple to prevail if Judge Koh had upheld Magistrate Judge Grewal's decisions. The issue of deleted emails would have helped Apple particularly in connection with the question of willful infringement. Now there will be two extremely soft instructions that cancel each other out.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.